The distribution of agricultural subsidies in the Czech Republic is returning to previous patterns. The State Agricultural Intervention Fund (SZIF), which manages major European and domestic subsidy programs, has determined that the Agrofert holding is once again a standard applicant entitled to the same treatment as other companies.
The Trust Fund Structure
To assume the role of Prime Minister, Andrej Babiš transferred Agrofert into a new trust fund. This structure is more autonomous than those used during his previous government service and is managed by externally hired individuals.
However, the arrangement ensures that Agrofert will pass to Babiš’s children as a normal inheritance upon his death. The status of independent management automatically ends once Babiš leaves the government, at which point a family council consisting of his descendants takes over.
Czech Law vs. EU Regulations
The Czech conflict of interest law requires public officials to avoid actions where personal interests could influence their functions. However, critics argue the law is ambiguous, as it primarily prohibits those in statutory bodies from entering state service, potentially leaving room for those with indirect ties.
In contrast, EU Regulation No. 1046/2018 is more stringent. Article 61 of this regulation states that individuals must avoid any situation that could be objectively perceived as a conflict of interest, including those based on family reasons, economic interest, or political affinity.
Because EU regulations have direct effect and override national laws, they serve as the primary authority for funds originating from the shared EU budget. The European Court of Justice has repeatedly affirmed that these regulations take precedence over national statutes.
Risks and Future Implications
SZIF has relied on opinions from private lawyers to justify its decision but has declined to release these documents. Notably, the fund has not consulted the European Commission, which manages the finances and has previously challenged Czech practices during 2019 audits.
While SZIF argues that “direct payments” based on hectares or livestock are automatic, Babiš could potentially influence the formulas for these payments as Prime Minister during the formation of the post-2028 EU budget.
This approach may carry financial risks. If the European Commission eventually decides to halt these subsidies, the funds may have already been paid out. This could leave SZIF and Czech taxpayers responsible for the loss, especially if the fund’s own current legal opinions make recovering the money from Agrofert more difficult.
Frequently Asked Questions
Why is Agrofert again eligible for subsidies?
The State Agricultural Intervention Fund (SZIF) decided that the recent transfer of Agrofert into a new trust fund structure is sufficient to meet legal limits regarding the combination of business and politics.
How does EU Regulation No. 1046/2018 differ from Czech law?
EU law is more comprehensive and strict, prohibiting not only actual conflicts but likewise situations that can be “objectively perceived” as a conflict of interest, including those arising from family or economic ties.
What happens to Agrofert after Andrej Babiš leaves the government?
According to the trust fund’s statute, the independent management regime ends automatically, and the fund is taken over by a family council composed of Babiš’s descendants.
Do you believe that indirect ownership through trust funds is a sufficient way to resolve conflicts of interest for high-ranking officials?
